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How will Seattle’s minimum wage law impact the Eastside?

More than 100 people gathered on Thursday in Bellevue to hear about how the new minimum wage law passed in the city of Seattle might affect employers on the Eastside.

Entitled, “Toward a livable wage: Implication for business, community and non-profits,” the event was held at the Bellevue Red Lion hotel, which also co-sponsored the event.

Paul Winterstein, the president of the Issaquah City Council and chair of the Eastside Human Services Forum, welcomed the group by noting that everyone in attendance was there because they "care about the welfare of others." Yet, as the meeting progressed, it was obvious that many were there who were also concerned about the impact of the new law on their businesses or non-profit budgets.

"The whole notion of a higher minimum wage leaves us conflicted," Winterstien said. "On one hand we want others to have what they need to live and get ahead. On the other, we are all consumers and want our goods and services to remain affordable."

While the minimum wage has changed often and even recently, Winterstein said, the changes made in Seattle are different.

"What is unique about Seattle's law is how big the changes are."

Speaker Lori Pfingst, of the Washington state Public Budget and Policy Center, is an economist and researcher who has been looking it inequality across the board in our state.

She said not only is income inequality harmful to individuals but it stymies economic growth. Wage policy is just one part of the strategy, she said, pointing to state budget policies and tax reform. A move to improve wages is a way to “restore the middle class.”

The impact of a higher minimum wage in Seattle may cause employees to leave lower paying jobs on the Eastside for higher wages in the city. Next, as employers adjust, the lure of higher pay for entry-level jobs will crowd out younger, inexperienced or disadvantaged employees. Finally, the impact of wage compression means that the higher lower-end salaries will mean more experienced and higher-level employees will be expected to be paid more.

A panel of four people spoke regarding the possible impacts on their organizations. They included businessman and former Issaquah City Councilman Mark Mullet, who is serving his first term as a state Senator representing the 5th District. A former international banking professional, who owns a Ben and Jerry franchise and Zeeks Pizza in Issaquah. He noted that he made $3.35 an hour at his first job.

He observed that for the Eastside, having Seattle go first on this issue is at an advantage. "Let Seattle do it. The Eastside can take a pause and watch and see how it will go,” he said.

Yet as an employer he has concerns.

Having such a wide differential between wages both across the county and within his group of employees, will impact who he will hire and how much he will pay them.

"I will have to decide what I am willing to pay my workers so that I can keep them,” he said. “At this point, I do not even want to guess what that might be.”

Jasmine Donovan of Dick's Drive-In, worried that a $15 minimum wage will hurt youth and disadvantaged workers, who will be pushed out by others perhaps more qualified or experienced.

The higher wage will bring workers to Seattle and crowd out disadvantaged or inexperienced workers, she said.

"Our wage now is for entry workers. Our jobs give them a start," she said. "It is not meant to be sustainable."

As for the impact on human services and their employees of a higher minimum wage, those increases will come out of a fixed budget that is set by funding agencies such as the federal government.

Sylvia Fuerstenberg, the executive director of the ARC of King County, said that if we pay more for wages, then other items such as benefits for those workers might be cut or our services changed. "The amount of money we are allocated will not automatically be increased to meet a higher payroll," she said.

"We pay wages set by state funding and grants.

"If we pay more for wages we have to cut into other pieces of the pie," she said. "The pie itself stays the same."

As for the state finding more funding for social services, Mullet pointed out that "the constitutional implications for education funding trumps all other budget needs at this point."

“Because of the McCleary decision, it is all about education funding," he said. "There is not much room for anything else."

At the end of the session, the panelists summarized their main concerns regarding Seattle's law.

Fuerstenberg believes that the wage initiative should be a regional proposal, not addressed city-by-city. It seems rushed and confused, she said. There are many implications of this law that were not addressed.

Mullet said he does not support the adoption of the Seattle law for the Eastside. "We need a regional or state minimum wage," he said. "In that way we can give it to the people who need that first job."

Several audience members asked questions that panelists struggled to answer.

One woman asked how her low-income clients who pay for home services will be able to pay if worker's wages have to be increased.

Another asked how he would manage when the higher minimum wage would cause wage compression at his small manufacturing business.

"If new or entry workers make $15 then experienced or skilled workers would need to be paid more," he said.

All agreed that the new law and its effect of raising the minimum wage is a good thing to do — for individuals and eventually for the economy. But they worried it was clumsy and imperfect.

"It is a blunt instrument to accomplish a difficult mission,” said one panelist.

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